TRADE OUTLOOK

Less optimal trade conditions continue

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Trade conditions remained stable in October 2019 but still subdued, i.e. an index level below 50. The seasonally adjusted Trade Activity Index (TAI) that reflects present conditions, improved to 42 in October – up from 40 in September 2019. Trade conditions are also expected to remain even over the next six months but subdued. The seasonally adjusted Trade Expectations Index (TEI) remained at 44 in October but was 3 index points better than a year ago.

All the components of trade activity were at better levels than in September except for inventories that was one index point lower, and input cost that rose by 6 index points on September 2019. New orders and sales volumes were notably higher with supplier deliveries also improving, Trade activity components are expected to remain steady to positive over the next six months.

The unpredictability of sales and input prices are expected to continue over the next six months. 73% of respondents expect rising sales prices while 76% expect input costs to increase. Slack demand in the economy is containing inflationary pressures. Unchanged inventory levels reflect the uncertainty and subdued trade environment. The volume of retail sales, the decline in real house prices and tight merchandise export and import volumes mirrors the current trade environment and underperforming economy.

Respondents identified government incentives to be biased towards the public sector. They also cited increasing interregional trade in Southern Africa with some respondents expecting a pickup in seasonal trade during the holiday period. Nevertheless, slower global growth is expected to impact on local business, while respondents are calling for stronger implementation of policy. Crime levels remain a constraining factor in the trade environment.

The employment sub index returned to 41 after being 38 in September 2019, while employment opportunities remain scarce with the sub-index on employment prospects for the next six months remaining on 40 in October 2019.

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